Banco Bpm Societa Ord

Good evening, this is the Coruscall conference operator. Welcome and thank you for joining the Banco BPM full year 2025 group results presentation. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Mr. Arne Riscassi, IR Manager of Banco BPM. Please go ahead, sir.

Good afternoon and welcome to Banco BPM full year results conference call. Our CEO, Giuseppe Castagna, and our Joint General Manager, Eduardo Gineo, will take through the presentation. And let me remind you, please, to limit yourself to two questions. And now I hand over to Mr. Castagna. Thank you.

Thank you, Arne. Good evening to everybody. For once, we are the only one in the evening, so we'll take our time, but I will try to be as quick as possible in order to give you the possibility to make an interesting Q&A session. So, first slide on page six, I will start. This is just a recap of the completion. We are more and more having on... our new business model, which, as you know, started a couple of years ago with the intention to build a business model driven by the product factory and able to hedge the contribution of commission and fees vis-a-vis NII revenues. I would say that this model is becoming more and more attractive. We are completing, basically, the different product factory steps. We will go through each one later on. But let me say that with this business model, we were able to support a very strong profitability, which with this split 50-50 interest income and commission is of course more sustainable for the next quarter and years. The results of 2025 was 2 billion, 80 million, 130 million higher than the guidance I gave you in the last quarter. Also, with the strong increase in terms of common equity at one, performed at 13.76%, versus, as you may remember, a planned minimum threshold of 13%. These results allow us to match the dividend per share of one euro, which we gave last year. So the balance dividend would be 54 cents, 17% higher than the first interim dividend, 46 cents. The payout ratio is still 80%, considering for this year, Bpm Societa Ord Bpm Societa Ord Bpm Societa Ord Bpm Societa Ord Bpm Societa Ord remuneration 24-25 reached 3 billion which is exactly half the strategic plan community target which is already achieved after a couple of years. Some further numbers which give you the sense of where we stand in terms of where we wanted to reach with our presentation of business plan in February last year As I mentioned before, we are already at non-NIIA revenues, on total revenues, 51%, cost-income ratio 46%, gross NP ratio 2.2%, and cost of risk at 40 basis points. On page 7, the pro forma net profit is higher because, of course, we are not considering in the stated accounting the first quarter in which we did not consolidate ANIMA So if we have a pro forma with consolidation animal, the net profit, the net profit would have been 2.120 million. If we compare, as I mentioned before, the 24 to 25 net profit, we have an increase of 20% excluding in 24 new transaction and solidarity one off. So retired funds one off. and the 1,880,000,000 which reached this year excluding animal one-off is a 20% increase in net income, which of course accounts for almost 20.5% of ROTE and 15.5% of ROE. The organic improvement was so high to offset completely in the Euribor reduction of this year. We started from a profit from continuing operation pre-tax of 2.5 billion in 2024. We have a total reduction in NIF at full funding cost of 200 million, a further reduction in NFR of 56 million, which were completely compensated by organic improvement coming from non-NII core, specifically commission and insurance, and a reduction of operating costs and provision. Like for like, so we have a plus 2 billion 550 million to which we add 263 million related to the integration of Anima starting from Q2. If we include also the first quarter of Anima, our profit from continuing operation would stand at 2.9 billion. So let's have a look to the composition of the profit and loss. We have a growing revenues in terms of total revenues from 5.7 to almost 6 billion. As I mentioned before, non-NII revenues on total revenues is 49% for pro forma, but 51% considering NII at full funding cost. Net fees and commission raised 21% to 2.5 billion starting from 2.055 million of last year. And the same strong increase of almost 60% comes from income from associates would grow from 200 million to 330 million. The Q4 was the first positive quarter of the last year in terms of core revenues, which grew almost 5%, thanks, of course, mainly to fees, but also to a higher contribution, Q4 and Q3 of NII. the same favorable trend we are experiencing cost control like for like we have reduction in cost of 1.7% which of course proforma takes in account also the impact of anime Significant decline also in provision where we reduced the total provision 26% with LLPs going down from 46 basis points of cost of risk to 40 basis points. Just a quick deep dive on risk profile. As you may remember, this was the main difference that we had when we started The merger, we had an MPE ratio of 22.5% vis-à-vis an average of the Italian bank at 15% and an average of the EU bank at 5%. As you can see, in the last three years, we have deducted massively this amount. And now we are at 2.2%, which is exactly in line with the Italian banks. and slightly above the 1.8% of the European average. Let me also remember that we were basically one of the few banks who didn't make recourse to the market to offset the MPE. In the same period, in the same nine-year period, we assumed that there were at least more than 25 billion of share issue in order to offset the MPE. from other banks. Also, the stock has a low record. We have now a 2.2 billion, 250 million of GBP, decreased by 600 million, which is a 21% reduction. And net MP went down 0.37 point to 1.2%. and basically we have zero bad loan if you exclude bad loans covered with state guarantees. We in the same time have also the higher NPE coverage because we increased for 52.5% to almost 56% the total coverage excluding again the state guarantee and also the vintage of our NPE portfolio has been reduced to less than two years. the default rate was 0.84% and we managed also to reduce 1.1 billion the stage 2 loans which now stands at 8% of total performing loans. Capital generation, we were able to generate 194 basis points after absorbing more than 260 basis points related to 1.5 billion of dividend distributed we have a sort of road of the common equity tier 1 during 25 which you know you may remember has been massively eaten by the animal acquisition not getting Danish compromise this accounted for 240 basis points on our capital to which we had 60 basis points of regular headwinds totaling 300 more than 300 basis points so with a starting point rebased in 2024 12% to this we had the capability to generate 176 basis points which brought the total to 13.76% to which we had to deduct the one-off levy on extra profit reserve which accounted for 18 basis points bringing the stated common equity tier 1 to 13.58% we managed in January to have some hedging on Bpm Societa Ord Bpm Societa Ord Bpm Societa Ord Bpm Societa Ord Bpm Societa Ord and generate such a consistent amount of capital as we did basically from nine years, every year of setting the losses that we had in reduction of MP, you can understand that the capital generation for the future will not be a problem. We are very confident to return very soon at a 14% level. Let's go into some detailed figure on page 12. We have the spreadsheet of Q4 and Q3 and full year 25 and full year 24. As I mentioned before, Q on Q, we have the first time of positive results of net interest income 1.3% higher than Q3. Net fees and commission 7.5% higher than Q3. Of course, it's a bit more difficult to make a comparison year on year because we have the contribution of Anima nine months this year. But anyway, we have a 21% of higher net fees and commission to 2.5 billion. Another quite remarkable contribution is coming from income from insurance, where year on year we pass from 116 million to 163 million. Core revenues went up 5% Q on Q and 2.5% to year on year considering more than 300 million reduction in NII year on year. Net financial results was 48 million positive due specifically thanks to the cost of certificates which went down to 167 million compared with 284 million last year. Total revenues went up to almost 6 billion compared to 5.7 billion last year and Q&Q went up 1.1%. As I mentioned before, we have a slightly increase in operating costs, but this is driven by the Anima Impact, which was not present in 24. If we compare like for like, we are down in cost 1.7%. Total provision down from 547 million to 403 million. Quarter on quarter, we have instead an increase, which is a seasonal increase of total provision to 160 million from 81 million. profit from continuing operation, pre-tax profit were 2.8 billion year on 25 compared to 2.5 billion 24, so 12.5% growth. Net profit from continuing operation is 17.4% growth with again a considerable growth also net income more than the figure that is shown on the page 12 of 2.8 billion compared to 1.9 billion. Maybe it's more effective to compare the two years without the one-off I mentioned before. Again, it's 1.880 million against 1.570 million, a growth of 20% year on year. On the right side of the slide, you can see how we managed, we were able to manage, and we will go through afterwards, the NII. Of course, there was a massive reduction in NII, but if we consider the NII at full funding cost, so with the contribution of the lower cost of certificates, we managed to keep the reduction 25 on 23 at only 2.2%. with 200 million reduction from 24 to 25. And you can see how the impact of commission basically is now higher than the impact on NIA in 25, growing to almost 3 billion from 2.3 billion of 23. So you can see the non-NIA revenues growing from 43% to more than 50%. Cost income down to 46% from 48%. Again, I mentioned already both the LLPs and net profit from continuing operation, which grew 38%, which is quite massive if you consider the reduction of NAI. Again, net interest income, specifically a reduction of 9% year-on-year, which is 1.3% positive on quarter. at full funding cost the reduction was only 6.2% and the results of the last quarter was justified by the increase of three basis points in Euribor which we were able to take in our commercial spread up to two basis points almost all the entire Euribor increase Specifically, we grew two basis points in the liability spread, maintaining at 1.47 the asset spread. The managerial action sensitivity basically reached the top as it was already in Q3. We are not edging anymore, both in terms of replicating portfolio due to the consistency of Euribor during the last months, as well as also the index of current accounts that were stable at 37% vis-a-vis 34% of last year. Also, there was a reduction on sensitivity rate at 150 million. Finally, on the last bottom right part of the slide, you can see how a strong help in NII came also from the reduction of the wholesale issue. in last year basically we reduced from the beginning of 24 to the last emission we were able to reduce the average of the wholesale ball spreads of 60 basis points which accounts for almost 35 million per year so that means that we have a lower cost of risk of lower cost for our issuing going on towards the end of the plan You can see how for each kind of issue there was a reduction based from the last issues related to the previous one. A good signal finally Q4 also from loan volumes. Of course there was all the year a strong generation of new lending up to 28 billion, 7 billion higher than last year. showing our constant presence close to the client make us take an advantage also in a period in which there is not long growth. We were able, of course, to foster a lot of new loans, taking an important share of commission coming from new lending. Specifically, new lending to households grew 40% year-on-year and to non-financial corporates grew 30% year-on-year. Also, in terms of low-carbon new money long-term financing, we were up to 7.6 billion compared to 5.7 billion of last year. As far as the stock is related, the Q4 was 1.2 billion up Q3 growing basically in all the different asset class non-financial corporate household and financial meanwhile when you compare with December 24 we were able to have a positive increase both in household and non-financial corporates meanwhile as you may remember we have only one institutional big ticket transaction amounting from 1.5 billion which impacted the reduction of 1.3 billion related to the institutional lending on the right side some quality description 73% of our core customer loan located in north of Italy we still continue to take a lot of advantage from the collateral of our loans, 52% are secured, 27% with state guarantee and if you go to SMEs, 63% are with collateral and more than 90% of the risk are concentrated in the best class from mid to low risk. Net fees and commission is the game changer of this year thanks not only to the animal contribution, but also to a growth of 5% normalized for the eco bonus reduction commission 25 of 24. As you can see, we passed from 2.055 million of 24 to 2.5 billion of 25. And this again, make clear the share of investment product fees passing from 36% to 49% of the total commission. You can have some detail on the right side of the slide. In the upper part, there is an investment product free growth 11% year on year, like for life. So without animal contribution, which of course became 1.2 billion, if you consider also the contribution of animal, which brings to more than 50% of the contribution of the asset management and wealth management fees. Also in terms of investment products placement, we grew 12% in line with the growth of the commission. On the other commission, we were able to contain the reduction at 1.9% which if we exclude the echo bonus impact on 24 became a growth of 1.2% specifically from having good results and increasing results, especially from P&C insurance, consumer credit, corporate investment banking commission, structural finance commission. Meanwhile, some reduction in, as I mentioned before, in echo bonus and instant payments and in the payment system activity. Let's make a quick focus on the insurance business. As you know, it's been one of the core pillars of our strategic plan. In the last two years, we have done a lot of work integrating 100% the life business and creating the new joint venture with Agricola in PNC. This year, we had both the IT migration of life and non-life, one run directly by us and the other one run by our partner of AgriCode. So, of course, as always in this case, you always experience some reduction in sales. Basically, it was not so much the case because if you see the contribution of the insurance business, this grew year on year 26%. from 255 million to 320 million with a pace which is much quicker than the pace that we need to reach the target in 27. Basically, in the last year, we had the same increase that we expect for the next two years. If we go through the different kind of insurance, life insurance grew 27%. Commission were up to 70 million from 67 million but what was really affecting these results was the income from the insurance business keeping of course now all the income coming from this kind of business which grew from 116 million of last year to 163 million of 25 which is almost in line with 175 million, which we have as a target in 2027. Let me remember that in 23, this business contributed only for 46 million to our profit and loss. As far as P&C is related, we have the same growth up to 23%. coming from 71 to 88 million. And again, definitely we are not yet at the final speed that we assume we can take in 26 and 27. A quick focus also on Anima and all the total customer financial assets, which in terms of captive volumes grew more than 13.7 billion in 2025 and more than 25 billion in the last two years. So a really remarkable growth. As you can see, last year we had a big impact also from net inflows. Asset under management grew 2.3 billion, asset under custody 3.5 billion and current account and deposit grew almost 5 billion. we can see almost the same pace if we consider the total customer financial asset held by our group which now amounts to almost 400 billion is 396 billion starting from 377 last year on a pro forma basis of course because we did not consolidate ANIMA last year with a growth of almost 20 billion year on year A final page on Anima. Of course, the most important piece of news is that we appointed at the end of January the new CEO, Mr. Paris Sinotto. And, of course, also the growth of Anima is quite considerable considering also the difficulties of last year managing from one side our acquisition the former CEO leaving in the last quarter and managing the integration of the new business into the group but Anima managed to grow 4% 8 billion year on year and growing 5% in terms of revenues and 16% in terms of net income so we are very happy of the contribution Anima is doing for us and we of course expect this figure bettering with the new management of the company let's go to the cost income down 46% thanks to a rigorous cost discipline that is now I would say quite a mark for our bank like for like we have the reduction 1.7% 46 million which of course including Anima is higher up to 2.7 billion. If we consider staff cost, we have a reduction of 1.5%, like for like. With Anima, we have a stated 1.8 billion. If we integrate also in the first quarter Anima, the figure would have been 1.825 billion but we assume that we are completely in target with the business plan which I may remember is 100 billion, 780 million because thanks to the retirement scheme we fostered last year we have already generated more than 1,000 exits and another 600 will be during the last two years this will generate 60 million of reduction of cost of personnel, only offset by 20 million of increase of national contract and new hiring that we are doing. Also in other administrative expenses, we have a quite strong reduction, 4.7% in terms of ASA, which instead we register a slight increase in depreciation and amortization due to the increasing amount of investment we are doing in IT and AI. Let me remember that the headcount that with Anima were performed more than 20,000 people beginning on 25 now are down to below 19,000 people. We have 18,970 people and a further reduction of 300 people is forecasted by the end of the plan. We already mentioned cost of risk, very good news in all aspects. Total down 600 million to 2,250,000,000 net bed loan down to 0.336%, which became 0.1% excluding state guaranteed loans. The cost of risk is down to 40 basis point, but this 40 basis point includes five basis point related to front-loading future de-risking for other 300 million, which with all regards to materialized during this year. Default rate at a low rate of 0.84%, increasing cure rate and, of course, decreasing net default rate. Also, the coverage is a record level for us. Without the state guarantee, we had almost 56% in MPEs and 77% of bad loans.

I'll give the floor to Eduardo Ginevra for the financial and capital side. Thank you very much, Giuseppe. I'll try to be very quick in the interest of time. Good evening, everyone, of course. So in this page 21, we see the evolution of the contribution of the financial components to our P&L and our capital reserves performed very well during the year. They had a negative contribution on a net basis above 500 million, now below 300 million, with a further improvement during the month of January. Bond portfolio is slightly below 47 billion, decrease in the quarter was due to some maturities, but you may remember that we described the evolution of this portfolio as pre-investing during the rest of the year Bpm Societa Ord Bpm Societa Ord Bpm Societa Ord Bpm Societa Ord Bpm Societa Ord area of in the category of amortized cost. Net financial result was negative last year for 82 million, now is positive for 48 million. Most important drivers of these results is this evolution are the reduction in cost of certificates from negative contribution 284 to negative 167. The other components accounted for 215 million out of which almost 100 million are represented by Montepaschi dividends, which, by the way, left us some room for prudent valuations of loan booked at fair value during Q4. 22, cash is almost at 54 billion with a positive evolution of total direct funding that now is above 137 billion thanks to 5 billion almost of increase in direct funding in current account and deposit indicators of liquidity and funding are on a very solid level with LCR in particular that is at 147% which is quite the level that on a 12 month basis the average we have continuously registered NSFR Bpm Societa Ord Bpm Societa Ord Bpm Societa Ord Bpm Societa Ord Bpm Societa Ord Bpm Societa Ord Bpm Societa Ord Bpm Societa Ord Bpm Societa Ord Bpm Societa Ord Bpm Societa Ord here are analyzed in terms of the evolution or the difference between the average spread of the strategic plan, which is the blue bar, and the issuance spread that for that category we have achieved in 25 years. So, for example, Senior Preferred, we have in the plan 140 basis points of spread. We issued this year 95 basis points of spread. And secondary market, which may, of course, be a slightly different type of indicator, but is interesting as a benchmark, as at the end of last year was at 63 basis points of spread. similarly also for the other categories you see that you are well ahead of where we expected to be when we drafted the plan in February last year. Page on capital here we focus on the evolution of this fourth quarter where we started at 1352 we have to book to account for the levy on extra profit reserves which dragged the capital for 18 basis points. So the real rebate starting point is 13.34. We are at a pro forma level of 13.76. This is thanks to the contribution of PNL, which after dividend contributes for nine basis points, 72 minus 63, to the contribution of DTAs and the comprehensive income reserves. RWA or Variational Risks is a one-off of 19 basis points due to the need to take account of ANIMA in our yearly full-year P&L replacing the previous full-year P&L which was less rich in terms of revenues and finally other components account for BIPs. So organic capital creation in this quarter has been 24 basis points on a pro forma basis taking into account the hedging transactions that we have executed in January we are at we are on top 18 basis points coming to the level I mentioned 13.76 MDA buffer allows us room for additional Bpm Societa Ord Bpm Societa Ord Bpm Societa Ord Bpm Societa Ord Bpm Societa Ord

Bpm Societa Ord Bpm Societa Ord Bpm Societa Ord Bpm Societa Ord Bpm Societa Ord Meanwhile, growing also in terms of net profit. So it's just not a substitution of income and profitability, but is a growing profitability coming from a sustainable remuneration of commission. Basically, we have the growth we experienced in the last year, which is already the double of the growth we will need to have in the next two years to reach the target Bpm Societa Ord Bpm Societa Ord Bpm Societa Ord Bpm Societa Ord Bpm Societa Ord so all these allow us to be very confident in the trajectory towards the 2 billion 150 million of the net income target with a very consistent ROTE and ROE that we almost already reached and the capability to continue to distribute a dividend of 1 euro also this year which as you can see at the progression from 23 cents to 56 cents two years ago one euro last year but as you may remember this one euro was coming from out of 400 million coming from the newman transaction this year the 1.5 billion comes all from a repeatable and sustainable profitability capability of generate profitability all in all we have with this distribution we will reach the 3 billion which is half of what we promised to the market, which is 6 billion, but we already have expectations because the first two years were considered lower in terms of profitability vis-à-vis the next two years. If we consider the average price of the stock in 2025, the dividend yield is 9%. Let's have a look. Recap on 25. Profitability at record level with over delivery of 130 million. More diversified and sustainable business model producing 50% of non-NII revenues. Record of asset quality reduction of NPE to 1.2% and a good increase in the common equity R1 ratio notwithstanding a very difficult year in terms of Edwin, just not to remember that the year was, in a way, more difficult for many reasons. But notwithstanding that, we are already ahead of the figure we gave with our business plan in February, vis-à-vis the target 26, both in terms of total revenues, in terms of operating costs, in terms of cost to risk, and these, of course, allow us to say that the pre-tax targets are confirmed with some room for overperformance. Of course, we know that for the next three years there will be some external challenge. We have a budget law which increases the tax rate in the plan horizon. We have also some incremental due to specific systemic charges Notwithstanding that, we think that through managerial action, the advantage accrued in 2025, the capital generation that we are able to produce, we will in any case be able to deliver one euro dividend per share also in 2026 and in doing so remaining ahead of the 6 billion target distribution that you have for 2027. This is my final page so please I would go for Q&A section.

Thank you. This is the Coruscall conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touch-tone telephone. To remove yourself from the question queue, please press star and 2. We kindly ask to use the handset when asking questions. Anyone who has a question may press star and 1 at this time. First question is from Giovanni Razzoli, Deutsche Bank.

Good afternoon to everybody. I have two questions. The first one is on the NII. We've seen an acceleration of the household segment in terms of long growing in the Q4, but most of the growth was driven quarter on quarter by the financial institutions. So I expect that the trend of the NII in the coming quarter could be supported more by the growth in the household volumes going forward whether these so I was wondering whether these my understanding is correct because on the other side I've seen that you have reduced by around the two billion euros you're replicating portfolio in the Q4 when compared with the Q3 and if I remind it correctly you tend to replicate much less than the other peers so I was wondering what shall we expect going forward in terms of NII when compared with the Q4 And the second question relates to the governance and specifically to the evolution of the governance and legal framework in the coming weeks. We've seen some coverage on the press. You are planning to introduce the changes in the article of associations. So what are the steps that we shall expect from here in terms of governance, legal framework? So if you have the opportunity to clarify this to us. Thank you.

Okay, thank you. Let's start from NAI. We think that the pace of new loans we were able to produce last year and also the increase in Q&Q is a good signal for forecasting a slow increase also in terms of portfolio of stock of loans. Beginning of the year is not that bad. Of course, every year you have to stand and replace what is aspiring end of the year. But we are already at a quite good pace. We are confident that this year could be the first year of recovery also in terms of loans. But don't forget that last year we grew 5 billion in terms of deposits. is, I think, a very strong assumption. I don't know if we can repeat at the same pace, but in any case, the margin coming from deposit is exactly the same as the margin coming from loan. So this is another very good way to increase NII without taking further risks. Of course, we will stand close to our client, taking all the advantage also for increasing loans, but it's not the only way to better NII. I leave to Eduardo the replicating portfolio, but maybe I can go through your question about governance. As you have seen from the published documents, we plan to amend our bylaws to comply with legio capitali and provide for an increased minority representation to our shareholders in line with the spirit of the law. as you know we have a new EGM on February 23rd to which will be which will be followed by the submission the slates for the renewal of the board if we will go for the list of the board we have to submit 40 days before the ordinary shoulder meetings of 16 April so this will be within 7 of March and if the list will be presented by the shareholders the presentation will be allowed up to 25 days before such extraordinary meetings so within 22 of March in terms of course of requirement I think that they are the usual requirement which are requested by ECB so of course, fit and proper requirements, independence requirements, rules, equilibrium on gender, and specifically, of course, we have some bylaws which imply that, of course, in terms of competitors, we cannot have in our board members of competitors.

Thank you. On the replicating portfolio, you're right. We have reduced the level versus what we had in September. But this was, I think, completely planned. In September, we basically entered into new transactions to anticipate Bpm Societa Ord Bpm Societa Ord Bpm Societa Ord Bpm Societa Ord Bpm Societa Ord Bpm Societa Ord Bpm Societa Ord Bpm Societa Ord Bpm Societa Ord our sensitivity overall in AI sensitivity is reduced especially compared to June given that on the period it was 50 million higher like for like of course so considering the contribution to an AI or the contribution including

Next question is from Sophie from Goldman Sachs.

Hi, here is Sophie from Goldman Sachs. Thanks a lot for taking my question. So my first question would be on the investment products on slide 15. We can see that the upfront fees are very strong at 343 million. should we expect these to remain the run rate going forward, or do you see a scope for increasing both the upfront fees and also the running fees on the investment products? And then my second question is on the systemic charges that you mentioned on slide 26, sorry, 27. that you expect kind of incremental systemic charges. Could you just walk us through what these charges are and how we should think about these new challenges? Thank you.

Thank you, Sophie. On investment products, yes, it's been a very strong pace, but we come from years of increasing this kind of of product and of course having now ANIMA into our group, it would be even easy to have the opportunity to give, to offer our client the best product, having the possibility to offer without any advantage for us, but only in the interest of the client, both insurance product, asset under management, funds, certificates and whatever. So we think this is something that we can continue. Ascent under management, notwithstanding the growth of the last years, we are still with the share which is a bit below the average of our competitors. So we feel that we can have the opportunity to have a common policy together with Anima and grow in this respect. I have to add that next year we will be this year of course 26 will be more attentive to the product which will generate a run rate rather than upfront this year we were a bit in the middle of our bank insurance business proposition and we had also the need to serve our clients with products which were more in the interest of our clients in terms of yield, reducing our commission in the run rate. Starting from this year, we are not anymore in this situation. We will have only one company which will do together with Anima the new product and this will make much easier to have product which will have more run rate embedded. I leave Eduardo for the systemic charge.

Okay, so on systemic charge, of course, there is this specific case which is very well known in the Italian market, Banca Progetto, which will require Italian banks to contribute through the interbank fund our share is around 20 million per year in the next five years. On top there is a small amount that will contribute to the insurance fund which is additional 5 million, 6 million. I'm talking about gross before tax.

That's very clear.

Thank you. Next question is from Antonio Reale, Bank of America.

Hi, good evening. It's Antonio from Bank of America. Two questions for me please. The first one is on your outlook for revenues in 2026. Your slide 27 shows your business plan targets which increasingly look very conservative now in the context of the strong numbers you've managed to deliver in 2025. and also in the context of your remarks in the presentation. So as things stand, your 2026 revenue number basically implies no growth year on year. And I'd like to understand or get a more up-to-date target on what you think this number could look like and possibly understand the moving parts on the sort of key revenue line items. The second question is really a follow-up on the previous question on governance. because I'm trying to square up. I think yesterday CREDAG said that they would like to have a fair representation on the board. And I mean, it's no surprise given the showholder register. Based on what you said earlier, though, of not having members of a competitor on the board, do you think this is going to require an additional approval from ECB or other authorities in Italy? I'm just trying to understand how this comment squares up, if I understand correctly. Thank you.

Okay. Yes, every time we announce some plan, it looks like not to be conservative. Then when we reach, of course, a further step looks conservative. Let's say that we are very happy where we stand right now. Of course, you know which were the figures for 2026. On top of that, we have some headwinds that I mentioned before. we are committed to make good results also for 26 trying to offset these 100 million of lower net profit coming from the new taxation and the contribution that Eduardo was specifying so I don't think it's something if you start from 1 billion 80 880 million which is the net profit of this year not considering the contribution of Anima I think is a quite impressive increase towards of course the final target which is more related to 27 and again we are also committing in paying the same amount of dividend for this year in terms of governance No, we do not need any approval. It's Credit Agricole, I think, that needs approval from ECB. We just have, as I mentioned before, we have done some change in our bylaws in order to accommodate, not only for Credit Agricole, but for the minorities, all the minorities, a more consistent pace, also considering the level of shareholding held by Credit Agricole. So we are going ahead. Of course, in order to change the bylaw, we need an approval from ECB, but it's not redelted to the Credit Agricole possible board member. Thank you. Okay.

Next question is from Manuela Meroni, Intesa San Paolo.

Yes, good afternoon. Thank you for taking my questions. The first one is on the capital base. I'm wondering if you expect to make some optimization actions of your reflected assets in 2026. I'm referring to potential SRT or maybe some action in order to reduce the capital impact of Anima. The second question is a follow-up on the question that you just answered. I would like to understand what should happen in order to allow you to revise your targets for 2026 and 2027. This is something that at some stage in 2026 we may expect. And the third question is on the hedging transaction that you executed in January. I'm wondering if you can elaborate a little bit more, providing some, let's say, indication also if there is any impact on the PNL. Thank you.

Thank you, Manuela. Eduardo here, Ginevra. In 2026, the indication that we gave of 14% is based on, I would say, more of the same of what we have done during this year. So Bpm Societa Ord Bpm Societa Ord Bpm Societa Ord Bpm Societa Ord Bpm Societa Ord extraordinary transactions expected in this evolution to contribute to this evolution in this fashion what we have done in the hedging transaction is a simple capital hedging structure that we have to avoid to deduct from capital participations that would have been that have exceeded the the threshold of 10% for the total participations below 10%. So it's a transaction that creates a synthetic short position counterbalancing the long positions and net-net generating capital efficiency via avoiding the deduction.

As far as your second question, Let me remember, Manuel, that we gave this number only in February this year. We're numbers that we gave under an OPS, so I think you can understand that we were not shy when we gave this number to the market. We are very happy that in the first year we're above. We are as well confident that we will be good in 26 and 27, but for 26, let at least... go through the one or two quarter in order to understand better the situation. For 27, just some figures. We have a target of 2.150 million. Without Anima, we are at 1.880 million. It's 270 million. Let me say that we can add another 100 million of tax that we didn't expect. is 370 million, is 20% more than the net profit this year. So let me wait a bit in order to increase a 20% increase of net profit, to which we are still very much committed. But it's difficult to say that we can right now, two years in advance, raise this target.

Thank you.

Thank you.

Next question is from Delphine Lee, JP Morgan. Good evening.

Thank you for taking my questions. Just first of all, just wanted to come back on the governance. Just trying to think about like, if you could, you know, give us some some color about what you think. Once you know, credit will have, you know, some representation in the board, like what implications that would have long term strategically. Bpm Societa Ord My second question is just like a very quick one on guidance on sort of net financial results, if you don't mind, given it can be sometimes a bit volatile. I mean, if you don't mind giving us a little bit of, you know, sort of a reminder of what you said in your business plan. And then also maybe for this year, what would you expect, you know, including the including or excluding the dividends of Montepasqui.

Thank you. Okay, I think for the first question, frankly speaking, I think that there will be an important shareholders which will be represented in the board. Doesn't change that the bank remain a public company with a very important shareholder. I think we have been able to run the bank quite independently up to now. all the move we have done in insurance asset management are completely showing independence of mind of our management so I don't expect any implication in this regard of course we will strengthen all the rules related to the conflict of interest this is something that also ECB will require for anybody being in our board running a business which is in some way in competition with us. But for the rest, I think also Crédit Agricole is very happy. They have invested very recently in our bank. They are getting some good reward from the investment. We have two joint ventures in common. So I don't expect anything different from what we do right now.

Okay, on net financial result, I think that is no surprise that this is an item that shows some volatility. We gave, we inserted in our strategy plan a conservative outlook for this item of the P&L, which after some reclassifications that we have done and we explained to the analyst community, while in June or in the second quarter of this year can be quantified in slightly below 50 million this is the indication for 2027 current expectation is to be able to be confident to do better than that leveraging on both the reduction in cost of certificates and on the ability to produce revenues from our structuring activity that is included within the certificates and so on and so forth. It is included within trading. Last but not least, of course, this item will include dividends from MPS which is factored into our plan for an amount consistent with the dividend payout which was announced one year ago by the bank.

Thank you very much. Next question is from Luis Pratas, Autonomous Research.

Good afternoon. Thank you very much for taking my question. The first one is on the cost of risk guidance. So, essentially, you printed 40 basis points this year. You also reduced the NP ratio significantly. I was just wondering why do you reiterate the York 43 basis points target? Are you seeing any signs of deterioration picking up? And then my second question is on the tax rate. Can you provide the guidance for the tax rate in 2026? I think you had 29% in 2025. So not sure if there were like anyone else here or can we just assume maybe like two percentage points higher, so 31%. Thank you.

Hello. Hi, Giuseppe Castagna. No, you're right. Of course, cost of risk, if we have now our cost of risk is basically driven by default rate. As you were mentioning, we have a very low stock, very well provisioned, so we don't have any possible increase of cost or risk coming from managing the stock. Of course, inflow, default rate is always a question mark. We have had a very good 25 as well as good 24. With this, assuming there could be Bpm Societa Ord Bpm Societa Ord Bpm Societa Ord Bpm Societa Ord Bpm Societa Ord considering that we don't have any stock to manage increasing provision of course the run rate related only to the cost to the default will be lower than our guidance and we will update it during the year tax rate we are in the area in our outlook in the area of 33%

including of course the increase in taxes from coming from the recent budget law this year correct your observation has been lower it's a technical outcome of the same budget flow originating one of effects on DTAs that were readjusted to the new tax rates introduced by the budget law so we basically have increased the current fair value of DTAs and this generated one-off benefit on taxes.

Thank you very much.

Next question is from Lorenzo Giacometti in Del Monte.

Yes, good evening. Thank you for the presentation and for taking my questions. I have actually two, so the first one is whether there is any chance that you will be able to obtain a review on the SCB's decision on the Danish compromise and the second one also on ANIMA is what are, in your opinion, the most reasonable options you have in the medium term for the stake you hold in Anima? I mean, keep it delisted or bring in industrial partners? Thank you.

No, on the Danish compromise, I think that the recent publication by EBA seems to close the various doors. so we are not taking in our plans we're not assuming to have benefits from reviews also bearing in mind this recent position from EBA Onanima 10% Onanima as I mentioned also before there are other

presentation we we are really happy to to be free to decide what to do with the remaining 10% as you know we have the possibility to take on board other partner commercial new commercial partner all the commercial partner all the definition of The banking system in Italy is ongoing, so let us wait the right moment to decide what to do. Of course, having the Animalist, I think, is much more flexible to operate in this respect. Also considering that basically for one year we had to offer to retire the 10% stake, the same price of... of the OPA we did. And basically right during these hours, the price of ANIMA is coming back towards the seven euro. So of course, it's something that we will decide, but we are not pressed. We have many projects, many potential opportunities that we want to exploit. Okay, thank you.

Next question is from Noemi Peruk, Morgan Stanley.

Good evening and thank you for taking my question. So I would like to ask which P&L line you see, in which P&L line you see room for overperformance in 2026 and which action are you planning to implement to reach targets? You mentioned, I will say, spread, but if you could elaborate more, it would be very useful. And then on the capital and 18 bps common equity impact from the hedging transaction, am I understanding correctly that you hedged the stake in Monte? And if so, what's the next stake at the minute? Thank you very much.

Again, we gave on page, I think the last page of my presentation was very clear in saying that we are above the plan, both in total revenues, in operating costs, in cost of risk, and for sure this will be the aspect that are more encouraging. Specifically, I would say commission, thanks to the consolidation of ANIMA for the full year, of course the insurance that we made the focus in order to make you understand the pace of growth we are experiencing. All the commission I think will grow and will be better than this year. Of course NII depends from the interest rate where they will stand. Of course with Ceneuribor which is like the current one, and we consider it to be stable. Of course, we think that we will be in line with the 2026 forecast, but lower than this year. Cost of risk, as I mentioned before to your colleague from Q&A, we think that depends on default rate. We are assuming 1% default rate. We think that with a better default rate, we can do better.

On the hedging transaction, I prefer to repeat what I said. We had inefficiencies due to the fact that in total our participations below 10% exceeded the 10% of our funds threshold and we implemented the transaction allowing us to come back within that maximum level avoiding these deductions.

Next question is from Hugo Cruz, KBW.

Hi, thank you for the time. Yeah, just one more question. So you talked about a lot of the revenue lines. I don't think you've given indication for trading, which has been very difficult to forecast. And also related to trading, should we expect any material impact from this transaction in January? So if you could just give a bit of an indication, what could be the trading income in 2026? Thank you.

Well, it's always, I mean, difficult to commit with indications on single lines. So the P&L trading, of course, is the most difficult. So again, allow me to say, that in the current market scenario, we believe we'll be able to do better than to improve the final level of contribution of trading both in 26 and in 27, allowing us some room or maneuver in general to exploit tailwinds on the revenue side.

Thank you.

Next question is from Adele Palama, UBS.

Yes, hi, good evening. Sorry to repeat the question, but I have a question on the NII evolution. So in the target for 2026, so the quarterly rate basically implied a little bit of decrease versus this quarter print. So now I understand that the guidance has like a degree of conservativeness but I want you to understand like in term of lending growth are you still expecting I think the plan had the 1.7 percent growth as assumption and then How is the lending growth expected also for 2017? I mean, is there any change or potential upside on that long growth? And then which are the possible headwinds that might bring the quarterly rate for 2016 NII down versus the fourth quarter? And then the second question is actually on the capital. I just want to double check the DTA recovery that you had in 2025 the impact on the capital the total one and then the DTA recovery that you expect for 2026 and 2027 I have like an amount of around 80 basis point between 26 and 27 and just want to check if that that amount is correct thanks

Okay, I'll try to answer to your first question related to NII. I think it's very consistent with the Euribor Forecast that all the banks are doing, basically flat on 2%. We are still linked to our Forecast of growth in terms of loans, but as I mentioned before, we, for instance, this year, we were very much better in terms of deposit growth, so we depend also on that. Having said that, we are reducing in our forecast the reduction vis-à-vis 25, if you consider the new Euribor average for 26, and we feel that it's not conservative, it's quite consistent with the current situation.

maybe Eduardo do you want to say on the DTA yes we gave indication that we expect from the DTA in February comprehensive income in total 150 basis points of capital creation between 26 and 27 most of this capital creation will definitely come from DTAs

Okay, sorry, if I can make up me a follow up on the NII. I mean, so it's the lending growth for 1.7 has an upside risk in your estimate.

What do you mean sort of an upside risk? You can do better. Okay, of course, normally, if there is a growth our bank historically due to the geographic footprint and strength in structural finance, SMEs, corporates. Normally we grow more than the banking system, but we don't see yet such a strong growth in order to say that we can change the forecast to 1.5, 1.6% growth.

Okay, thanks.

Thank you.

Mr. Riscassi, gentlemen, there are no more questions registered at this time. Sorry, we have one more question from Giuseppe Grimaldi, BNP Paribas.

Hi everybody and thanks for taking my question. I have a brief one related to the replicating, just a clarification. You said before that you expect some tailwind from the replicating this year. Can you help us in understanding the magnitude of that?

I mean, 25 billion of average volumes, magnitude may help if you compare a scenario of past year 2.17, 2.2 let's say, average URI, but this year expected level of 2%. and some delay in the translation of EURIBOR into cost of the swap. So the order of magnitude is slightly less than the 20 basis points multiplied by the 25 billion.

Thank you for the clarification.

Also will depend, sorry, on renewal of existing BPM. swaps with new ones, so there are risks in that because we have part of this replicating that is maturing during the year, some 6 billion, and over time we will need to see what will be the market rates from the swap curve.

Thank you. And maybe just a quick follow-up, if we can expect some growth in NII considering you have you have given a pretty solid outlook in terms of volume and replicating as well is expected to be a tailwind so what kind of NII growth we can expect for 26 we stick to the guidance that you gave in the plan conservatively stay slightly above 3 billion thank you

Thank you very much to everybody. I expect to see you in person in the next few days. And thanks for your attendances. Bye.